Saturday, July 28, 2007

There are some companies that are meant to be speculative vehicles. Others are supposed to be the kind of stock that the proverbial widow and orphan can safely own. When investors in one of those are defrauded, the crime takes on a special level of venality.

And that brings me to Joseph Nacchio, the former chief executive of Qwest, who was sentenced to six years in prison today. He will also have to pay $71 million, which may not make too large a dent in his wealth. Since he is just 58, he can look forward to a long post-prison life.

Qwest was a creation of the bubble era, when tales of fiber-optic wonders could entrance speculators. If that was all Qwest was, it would have gone broke when the bubble burst.

But Mr. Nacchio managed to arrange a merger with a real company — US West, one of the Baby Bells — in 2000, just before the bubble burst. By then, the government says, he had been concealing his company’s real prospects for some time.

As the local telephone company, US West had attracted conservative investors. Retirees trustingly left their life savings in the stock. And they were all but wiped out. By the bottom in 2002, an investment of $64 in US West at the end of 1998 was worth less than $2. The stock has come back some since then, but for some retirees, that fall made the difference between getting by and having to go back to work at any job they could get.

I’d like to think that the fate of those people will haunt Mr. Nacchio after he gets out of prison. But I doubt it will.